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Total Family Chiropractic v Mercury Cas. Co., 2010 NY Slip Op 51470(U)(App. Term 2d Dept. 2010)

This was another one that did not necessarily go my way.  By way of explanation, this was a complicated case, where the defense was whether plaintiff assignors made or conspired to make material misrepresentations in the procurement of the insurance policy.

The bills were delayed pending EUO’s of the assignors.  The assignors were coy about admitting that Karoy Brown resided with his soon to be bride, Crystal Franklin Brown.  There were four vehicles that were registered and owned by Crystal Franklin.  Evidence was adduced that a trailer was parked in front of the Franklin residence, which contained lawn mowers and other equipment.  Karoy alleged that he commuted from New Jersey to Patchogue to perform landscaping for a man whose name and number he could not remember.  He worked between 3-5 days per week, for 12 hours per day.  He would always go back home to New Jersey at the end of the day.  Both assignors denied using the vehicles for any commercial purposes.  Karoy had a suspended driver’s license during the relevant time period.  Also, Karoy made a pass at the court reporter after the EUO.  Thank goodness Crystal did not see that.

Evidence was also adduced that Crystal kept logs of  the jobs that were performed.  Both Assignors had cellphones.  Crystal had a lease for her place, and had a landlord.  Other material information was in existence.

The bills were delayed following the EUO in order to obtain this information.  Once obtained, a further investigation would be done, which would shed more light on this case.

Nobody ever complied with the verification requests.

Had the supplied information demonstrated that the vehicles were used for commercial purposes or that Karoy was a resident and used the vehicle, then the claims would have most likely been denied due to the making of material misrepresentations in the procurment of the insurance policy.

Dueling motions for summary judgment were made following commencement of this action.  A spreadsheet was used to log all of the pertinent dates for each bill.  This case was pre-LMK so there were tons of bills for $33.70 and $67.40 flying around out there.

The Court said the following: “In an attempt to establish that the time period in which it had to pay or deny the claims was tolled due to outstanding verification requests, defendant relied upon spreadsheets annexed to the affidavit of its claim representative. However, because the claim representative did not establish that the spreadsheets constituted evidence in admissible form (see CPLR 4518 [a]; People v Kennedy, 68 NY2d 569, 579-580 [1986]; Palisades Collection, LLC v Kedik, 67 AD3d 1329, 1330-1331 [2009]; Speirs v Not Fade Away Tie Dye Co., 236 AD2d 531 [1997]), defendant has not shown that it made timely verification requests.”

The information annexed to the spreadsheets were the dates the bills were received, verifications sent, etc.  All of this information was annexed to the motion itself.  In fact, the motion was about 1000 pages.  The spreadsheet was more or less illustrative.  I mean, I usually put a chart in my motion and put the information in the said chart.  Since there was so much information for each bill, I used a spreadsheet instead of one of my charts in this case.

The affidavit of the claims representative had the standard language that this court previously found to be sufficient to allow the entry of all of the documents into evidence.  The information in the spreadsheet was incorporated by reference.  The case the court cites, Pallisades Collection, involved an assigned credit card debt that Pallisades purchased from Discover.  Pallisades had to establish a business record foundation involving Discover’s business practices, in order to allow the entry of Discover’s data into evidence.

Here, the information was always stored and processed by Mercury.  The affidavit, after laying a foundation for the dates and form of the documents,  said that the spreadhseets annexed to the affidavit memorialized the information pertinent to the claim.  I have to disagree with the court on this one.

Anyway, the moral of the story is this.  If you have information that requires a spreadsheet, make sure you somehow incorporate the actual spreadsheet as part of the affidavit.

E.g.

“3. The following represents the claims handling in this matter:

[INSERT SPREADSHEET]

4. blah blah.

5. Facsimiles shall be deemed originals.”

On the bright side, the notice of trial was stricken so that Mercury can now search this state to find the Brown family and invite them to come in for an EBT.

Stephen Fealy, M.D., P.C. v State Farm Mut. Auto Ins. Co., 2010 NY Slip Op 51442(U)(App. Term 2d Dept. 2010)

I was involved in this case.  The matter involved a knee surgery that the carrier alleged was not causally related to the motor vehicle accident.  The main piece of proof that was presented was a detailed radiological review.  It demonstrated that the knee injury was degenerative, pre-existing and in part the result of the assignor’s body habitus.  I thought it was one of the better radiological reviews I ever saw. It was obviously sufficient to demonstrate a prima facie entitlement to summary judgment.

In the original opposition, and the only one the Appellate Term considered, the plaintiff treating doctor made a conclusory allegation that the injury was related to the accident.   What was important to discern to was that in the original answering papers, the actual MRI films were never reviewed, and there was no evidence presented to rebut the radiologist’s report and affirmation.  Following my reply that pointed out the glaring holes in Plaintiff’s proof, Plaintiff filed a sur-reply, a tacit admission that more needed to be placed in their answering papers to defeat the summary judgment motion.  I will give Plaintiff’s counsel credit for doing this – it definitely showed a gumption I do not see too much of in this field of law.  Nonetheless, the sur-reply should not have been considered, which Civil Court considered anyway.  In any event, the sur-reply had gaps in proof, similar to that in the initial answering affirmation.  Civil Court found an issue of fact.

Based on the foregoing, I felt compelled to appeal – not because I am “appeal happy”- but because I earnestly felt Civil Court totally got this one wrong.

The Appellate Term at least kicked the sur-reply.  This is ironic because this court reached the opposite conclusion when presented with this exact procedural scenario in Cornell Medical v. Mercury.  Plaintiff, in its brief, even cited to Cornell Medical v. Mercury for the proposition that the sur-reply should be considered.  Yet, the situation in Cornell was more egregious than that found in this case, because my former firm received the sur-reply in Cornell the day before the final motion return date.  I think the sur-reply in this case was received a few weeks before the final return date, but I am not sure.

In any event, the Appellate Term found an issue of fact because “[t]he affirmation in opposition, written by Dr. Fealy, the surgeon who actually performed the procedure on the assignor, read in conjunction with the other medical and hospital reports indicating that the assignor had complained of left knee pain within days of the accident, is sufficient to raise an issue of fact that must be resolved at trial.”

This is a dangerous precedent.

Remember, on a motion for summary judgment, the proponent of the motion must demonstrate its defense prima facie, or demonstrate that an element of plaintiff’s case lacks merit.  People do not realize that on a motion for summary judgment, there is no difference between casting something as an element of a defense as opposed to casting something as an element of a party’s prima facie case.  You must always prove a negative.  Thus, the issue of causation is born by the defendant on a summary judgment motion, regardless of who bears this burden at trial.  This is an important point.

As we also know, in the non no-fault context, a party who wishes to defeat a prima facie showing of lack of causation based upon a radiological review must submit evidence demonstrating that a qualified doctor read the films and disagreed in detail with the findings of the defendant’s radiologist’s review.  The proof required to rebut a finding of lack of causation, based upon a radiological review, is the same in all contexts.

In this case, the Plaintiff failed to meet his burden based upon settled law.  I think Plaintiff was aware of this – hence the sur-reply.  As such, the Appellate Term should have reversed the order of the Civil Court.

One more thing.  What is the proper no-fault rate for the procedure in this case?  I think it is a little less than $25,000?  I am not sure.

Use and Operation.  This is one area of law that is all over the place.  Practitioners that are called upon to give opinions on whether coverage is implicated through a vehicle’s use and operation, and whether coverage should be shared between numerous carrier, should usually walk on egg shells.  This is a difficult area of law, and it changes every day, and this case is a doozy.

I am going to pretty much cut and paste this decision and the dissent – something I try to avoid.  In my years of practice, I have never seen a court explicitly hold that use and operation should have a different interpretation under the SUM endorsement as opposed to the PIP endorsement.  If someone could give me a bright line rule on this coverage issue, please share.  Please do not cite Matter of Manhattan & Bronx Surface Tr. Operating Auth. (Gholson), 71 AD 1004 (2d Dept. 1979).

Also, this may end up at the court of appeals.  It really should actually.  And now………..

Matter of Liberty Mut. Fire Ins. Co. v Malatino, 2010 NY Slip Op 06204 (3d Dept. 2010)

“While respondent Marcia Malatino (hereinafter respondent) was returning to work after taking a break in the employer’s parking lot, she walked into a piece of sheet metal extending approximately five feet beyond the tailgate of a coworker’s parked pickup truck,^[FN1] sustaining facial lacerations and a broken nose. According to the record, the coworker had torn the sheet metal off a building on his property and planned to deliver it to a junkyard after work.”

“Initially, we note that the issue herein involves the right to arbitration under the specific terms of the parties’ supplemental underinsured motorists policy and not the application of any statutory no-fault provisions ^[FN2]. A court may grant an application to stay arbitration “where ‘the particular claim sought to be arbitrated is outside [the] scope of the agreement to arbitrate’” (Matter of Farm Family Cas. Ins. Co. [Trapani], 301 AD2d 740, 741 [2003]

Clearly, the pickup truck was not being operated at the time of the accident — having been parked in the employer’s lot when the coworker arrived at work. The focus herein, however, is whether the vehicle was in use so as to fall within the scope of the terms of the supplemental underinsured motorists policy. Here, at the time of respondent’s injury, the pickup truck was being used by the coworker to transport the sheet metal to the junkyard after work. Construing the language of the supplemental underinsured motorists policy liberally “in favor of the insured and strictly against the insurer” (Penna v Federal Ins. Co., 28 AD3d at 731), and given the causal connection between the use of the pickup truck to transport the sheet metal and respondent’s injuries, we find that respondent’s request for arbitration falls within the scope of the parties’ agreement….

NOW THE DISSENT

“While “use” of a motor vehicle encompasses more than just driving and extends to other incidental activities (see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 639 [1991]), there are limits to that term and the corresponding insurance coverage ^[FN4]. The majority holds that the truck here was being used to contain sheet metal until the coworker could transport it, rendering the vehicle in “use.” This broad finding places no parameters on the use of a vehicle. It is unclear if the majority considered that the truck was in use while containing the sheet metal only because the coworker intended to transport the sheet metal to the junkyard that same day, or if the truck would be considered in use as a vehicle if the sheet metal was placed there a year earlier and the coworker regularly parked his truck with metal protruding from his tailgate. Conversely, if the truck was never moved from the parking lot but was regularly utilized to store different materials in the same location, would the parked truck constantly be in use as a vehicle? Rather than [*4]expanding the application of the statute and regulation requiring coverage for injuries arising out of a “motor vehicle’s ownership, maintenance or use” (11 NYCRR 60-2.3 [f] [II]; see Insurance Law § 3420 [f] [1]), we should adhere to the current rule that looks to whether the “circumstances constituted an ‘on-going activity relating to the vehicle’ which would necessitate a conclusion that the vehicle was in use” (Trentini v Metropolitan Prop. & Cas. Ins. Co., 2 AD3d 957, 958 [2003], lv dismissed 2 NY3d 823 [2004], quoting Matter of Celona v Royal Globe Ins. Co., 85 AD2d 635, 636 [1981]; see Zaccari v Progressive Northwestern Ins. Co., 35 AD3d 597, 599-600 [2006]); Wooster v Soriano, 167 AD2d at 234).

In Sullivan v Barry Scott Agency, Inc. (23 AD3d 889 [2005]), this Court held that a plaintiff’s back injury caused by lifting a heavy box was not related to the use of a motor vehicle, even though he was standing in a delivery van when unloading the box. We found the proximity to the vehicle “wholly incidental,” “[a]s plaintiff’s injuries would have occurred even if he had been standing on the ground and lifting the box” (id. at 890; see Sochinski v Bankers & Shippers Ins. Co., 221 AD2d 889, 889 [1995]; United Servs. Auto. Assn. v Aetna Cas. & Sur. Co., 75 AD2d 1022, 1022 [1980]; cf. Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 215 [1996]). Similarly, respondent here would have received the same injuries had the sheet metal she walked into been protruding from any object other than a vehicle. Under the circumstances, there was no ongoing activity related to the parked truck — in its capacity as a motor vehicle, rather than as a storage bin for sheet metal — so as to necessitate a conclusion that the vehicle was in use when respondent was injured (see Sullivan v Barry Scott Agency, Inc., 23 AD3d at 890; Matter of New York Cent. Mut. Fire Ins. Co. [Hayden — Allstate Ins. Co.], 209 AD2d 927, 928 [1994] [staying arbitration where "accident did not arise out of the inherent nature of the automobile as such"]; Reisinger v Allstate Ins. Co., 58 AD2d 1028, 1028 [1977], affd 44 NY2d 881 [1978]; McConnell v Fireman’s Fund American Ins. Co., 49 AD2d at 677). Accordingly, petitioner was entitled to a stay of arbitration because its insurance policy does not provide coverage for respondent’s injuries.”

Matter of Mvaic v Interboro Med. Care & Diagnostic PC, 2010 NY Slip Op 04522 (1st Dept. 2010)

“MVAIC defended the arbitration on the ground that the police accident report showed that the offending vehicle was registered out-of-state and was insured, but the arbitrator refused to consider that defense on the merits on the ground that MVAIC had failed to pay or deny the claim within 30 days of its submission, as required by the no-fault law (Insurance Law § 5106[a]; 11 NYCRR 65-3.8[a][1]; [c]). This was contrary to settled law (see generally Matter of State Farm Mut. Auto. Ins. Co. v Lumbermens Mut. Cas. Co., 18 AD3d 762, 763 [2005]) recognizing a narrow exception to the 30-day deadline for defenses based on lack of coverage (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]). New York Hosp. Med. Ctr. of Queens v MVAIC (12 AD3d 429 [2d Dept 2004], lv denied 4 NY3d 705 [2005]), relied on by the arbitrator, did not involve a lack of coverage issue.”

A few things should be observed.  First, note the special treatment the courts give MVAIC as opposed to that given the insurance carriers that my fellow brethren and I regulalry defend.  That being said, the Appellate Division correctly found the existence of a triable issue of fact as to coverage.  But note how the Appellate Division, Second Department has insulated most arbitration awards from judicial scrutiny, whereas the First Department appears willing to look at the merits of an arbitral dispute.

Wilkins v Khoury, 2010 NY Slip Op 03435 (2d Dept. 2010)

“While the plaintiff, in opposition, raised a triable issue of fact as to whether the defendants departed from good and accepted podiatric practice by failing to diagnose her potentially gangrenous condition and failing to instruct her to go to a hospital immediately for intravenous antibiotic treatment, she failed to raise a triable issue of fact as to whether the defendants’ conduct was a proximate cause of her injuries (see Brocco v Westchester Radiological Assoc., 175 AD2d 903, 904-905). The plaintiff’s voluntary act of not going to the hospital for intravenous antibiotic treatment when she was instructed to do so by an orthopedic surgeon, who saw the plaintiff after she was treated by the defendants, was independent of and far removed from the defendants’ conduct and, thus, was a superseding act which broke the causal nexus (see Pierre v Lieber, 37 AD3d 572; Brocco v Westchester Radiological Assoc., 175 AD2d at 904-905).”

The question of whether an intervening act breaks the causal nexus between the accident and injury plays out frequently enough in no-fault practice that it seems instructive to follow this line of cases.

McDuffie v Rodriguez, 2010 NY Slip Op 03366 (1st Dept. 2010)

“Defendants met their prima facie burden of establishing that plaintiff did not sustain a serious injury by submitting the affirmed reports of experts who, after examining plaintiff and reviewing her medical records and MRI studies, found a lack of causation between her complaint of right knee pain and the subsequent arthroscopic surgical repair and the accident, and instead attributed plaintiff’s condition to pre-existing degenerative osteoarthritis (see Jean v Kabaya, 63 AD3d 509 [2009]). In opposition, plaintiff raised a triable issue of fact, as her treating physician noted acute injuries related to the automobile accident as well as degenerative changes. Defendants’ remaining arguments need not be addressed.”

What was not reviewed?  The MRI FILMS.

Why does this matter?  Well, what is the standard to defeat to a causation defense based upon a radiologist’s review of the films finding that the condition is degenerative?

I will tell you this much: it is more than some “[p]hysician not[ing] acute injuries related to the automobile accident….”  The answer may be found here.

Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 2010 NY Slip Op 20131 (App. Term 2d Dept. 2010)

“In any event, the Civil Court would have subject matter jurisdiction in a declaratory judgment involving an obligation of an insurer in which the underlying amount sought to be recovered did not exceed $25,000.”

Dave Gottlieb at NFP has an interesting observation about this case.

Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co., 2010 NY Slip Op 20130 (App. Term 2d Dept. 2010)

“Plaintiff herein was neither named nor served in the declaratory judgment actions nor, at the time, was it in privity with someone who was, and plaintiff otherwise had no full and fair opportunity to appear and defend its interests in those proceedings. Accordingly, the judgments do not collaterally estop plaintiff from recovering in this action (Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481 [1979]; Mid Atl. Med., P.C. v Victoria Select Ins. Co., 20 Misc 3d 143[A], 2008 NY Slip Op 51758[U] [App Term, 2d & 11th Jud Dists 2008]; see also Green v Santa Fe Indus., 70 NY2d 244, 253 [1987]). Moreover, as the declaratory judgments were obtained on default, there was no actual litigation of the issues and, therefore, no identity of issues”

Much can be said about this case.  Had Plaintiff Assignee been named and a default was entered, then this would be a closer call.  My concern about this case is the line “[n]or, at the time, was it in privity with someone who was…”

Assume that Claimant, after executing an assignment, violates one of the several conditions precedent to coverage, and the claims are timely and properly denied based upon a violation of a condition precedent to coverage.  I am thinking of  IME no-shows, EUO no-shows and possibly the 30-day written notice rule.

I would posit that those defenses would not apply if the majority’s privity rule is taken to its logical conclusion.  I also have grave reservations about the applicability of the “standing in the shoes” rule, which the Appellate Division, Second Department has asserted numerous times in these types of cases.

Justice Golia’s dissent, besides recounting a fact pattern that leads the reader to the conclusion that the accidents in this matter were intentional and probably offends most people on both sides of the bar, makes some good points.  He pretty much says what I have said above and have always believed, to wit, that the no-fault law and regulations somewhat modify the traditional notions of the common law assignment.

The Courts realize this fact and even said so in A&S Medical, P.C. v. Allstate Ins. Co., 196 Misc.2d 322 (App. Term 1st Dept. 2003), aff’d, 15 AD3d 170 (1st Dept. 2005), whose ultimate outcome I agreed with, when the following was held: “To the extent defendant seeks to invoke the general rule that an assignee is subject to the same defenses as would be available against its assignor (see, General Obligations Law § 13-105), the rule, as codified, finds no application in circumstances where, as here, the assigned claim is “regulated by special provision of law” (id.).

I tend to believe that this case probably should not be appealed any further since the Plaintiff Assignee providers were not named in the complaint.  This is an issue, however, that on proper papers needs to be addressed by the Appellate Division.

Rosado v Hartford Fire Ins. Co., 2010 NY Slip Op 02119 (2d Dept. 2010)

“[An injured person was] standing with his feet on the pavement, reaching with his hands into a side bay of the delivery truck to rearrange empty cases of beer. When the box truck hit the plaintiff, it pushed him approximately 10 to 12 feet, pinning him between his delivery truck and the box truck, until he came to a stop against the first side bay of the truck on the driver’s side.”

“In accordance with the liberal interpretation afforded the term “occupying” (see Rowell v Utica Mut. Ins. Co., 77 NY2d 636, 639), we find, as a matter of law, that the injured plaintiff was “in” or “upon” the delivery truck at the time of the accident such that he was “occupying” the delivery truck within the meaning of the SUM endorsement”

Since the PIP case law seems to track the SUM case law as to use, occupation and operation, do we have an expansion of these terms of art?

Nursing Personnel Homecare v New York Cent. Mut. Fire Ins. Co., 2010 NY Slip Op 50450(U)(App. Term 2d Dept. 2010)

“In support of defendant’s motion to vacate the default judgment, there was more than a “mere denial” of [*2]receipt of the summons and complaint (see Montefiore Med. Ctr. v Auto One Ins. Co., 57 AD3d 958, 959 [2008]). Defendant submitted an affidavit from one of its no-fault litigation examiners, who had personal knowledge regarding defendant’s practices and procedures in retrieving, opening and filing its mail and in maintaining its files on existing claims. In said affidavit, the no-fault litigation examiner stated that defendant had never received the summons, the complaint or the motion for a default judgment (cf. Westchester Med. Ctr. v Philadelphia Indem. Ins. Co., 69 AD3d 613 [2010]). Accordingly, pursuant to CPLR 317, defendant met its burden of showing that it did not receive actual notice of the summons in time to defend the action.
Furthermore, defendant established the existence of a meritorious defense to the action. Defendant submitted an affidavit from its litigation examiner in which he stated that the assignor had cancelled her insurance policy with defendant prior to the date of the accident and had not subsequently taken out another insurance policy with defendant.”

As many people know, vacating a default in the Second Department based upon the allegation of the “non-receipt” of a summons and complaint is a daunting task.  The resolution is either a traverse hearing or an ordering denying the opening of the default.

NYCM used CPLR 317, together with a well written affidavit of non receipt, to allow the court to exercise its discretion to open the default.  As us New York procedural nerds know, this is not an easy task.  So, I tip my hat to the attorney who represented NYCM on this case.